Gov. Locke of Washington Asks Feds to Cap Electricity Prices

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Gov. Locke Asks Federal Government To Cap Electricity Prices

December 13, 2000

By KOMO Staff

OLYMPIA - Gov. Gary Locke on Wednesday joined the chorus of politicians and utilities asking federal energy regulators to put a cap on skyrocketing costs for electricity.

Regional power providers like the Bonneville Power Administration sent enough juice to help California avert blackouts, but the situation in Washington is bad enough that some residential consumers are facing double-digit rate increases and businesses are curtailing operations and laying off workers.

Locke, in conjunction with the Washington Utilities and Transportation Commission, asked President Clinton and federal regulators to immediately cap wholesale power rates consistently throughout the western United States.

"I also request that you take whatever action is available to you to require full and ongoing operation of all available power plants in the region throughout the winter," Locke said in his letter to Clinton, U.S. Energy Secretary Bill Richardson and James Hoecker, chairman of the Federal Energy Regulatory Commission, or FERC.

California Gov. Gray Davis and Sen. Dianne Feinstein, D-Calif., asked for a price cap earlier in the day. Bellevue-based Puget Sound Energy made the request in October.

Energy Prices Jump 100 Times From Last Year

Utilities throughout the West are struggling to pay the bills as the cost of electricity at the wholesale level has soared. A megawatt-hour that sold for about $35 a year ago was selling for some $3,000 a few days ago, utility officials said.

Two major California utilities indicated Wednesday that they were nearly bankrupt due to the sky-high prices, prompting at least a dozen suppliers to withhold sales for a time without cash up front. Richardson stepped in and ordered power generators in the Pacific Northwest to immediately send a jolt of electricity to California.

Regional power officials said Washington, which operated under its own electricity cutbacks in recent days as cold weather approached, had power to spare Wednesday as the weather improved.

Short Term Relief, Long Term Problem

But the short-term relief belied a long-term problem.

California and Washington are part of the same western power grid. But a combination of factors has threatened power supplies in some areas and sent prices into the stratosphere: low reservoirs in the Northwest due to a dry fall, California's deregulation of the electricity industry, cold weather, a proliferation of high-voltage Internet companies, the shutdown of some power plants for maintenance and a lack of new power plants.

Locke, in his letter, attributed much of the blame to California's move to an unregulated electricity market, which he called a "flawed restructuring experiment" that requires federal action "to restore stability and rationality to the market."

Snohomish PUD, Tacoma Power Hike Rates

Some Washington consumers are feeling the impact more than others.

The Snohomish PUD, for example, approved a 35 percent rate increase on Wednesday, effective Jan. 1. Tacoma Power, a public utility like the Snohomish PUD, has proposed charging its residential customers an unprecedented 86 percent surcharge to cover the unexpected costs.

So far, Puget Sound Energy's electric customers have been insulated from the market troubles. Unlike public utility districts, Puget is operating under a five-year rate plan set by the state utilities commission.

Puget spokesman Grant Ringel said the utility is buying some power from the wholesale market, but a combination of self-produced electricity and long-term contracts immune to the price fluctuations has allowed Puget to maneuver through the volatility "fairly well so far."

Still, utilities' problems aren't limited to the electricity market.

Four natural-gas companies are scheduled to update Washington state regulators Thursday on the impact of sky-high prices on that wholesale market.

In addition, the utilities commission will take its first look at a dispute between Puget Sound Energy and a group of big industrial customers seeking to get out of an arrangement to buy power at wholesale prices.

For more information, check out the Washington Utilities & Transportation Commission at www.wutc.wa.gov

-- (in@energy.news), December 14, 2000

Answers

It was deregulation and price controls that put a number of california power plants out of business. Obviously nobody could see past their feet for what the consequences could be. This is capitalism at its extreme, supply-and-demand. I think its due to banning prayer in school. Those who grew up without a moral compass are controlled by greed.

-- Johnn Littmann (littmannj@aol.com), December 14, 2000.

http://www.king5.com/detailtopstory.html?StoryID=10530

Governor asks regulators for relief from energy prices

December 14, 2000, 12:45 PM

OLYMPIA - Washington Governor Gary Locke urged the federal government Thursday to cap the price of wholesale power, as plants were shut down and residential electricity bills were going through the roof.

Over the last couple of weeks, plants have shut down, leaving people out of work, and residential electricity rates were soaring. Locke said it's a crisis that has to stop.

“This situation cannot continue as is. Without action to bring wholesale power costs down to fair and reasonable levels, the prosperity that we've worked so hard to achieve in the past decade can be undermined in just a matter of weeks, if not months,” he said.

The federal government has already intervened in California, where some utilities are on the verge of bankruptcy. Energy Secretary Bill Richardson ordered the Bonneville Power Administration Wednesday to spill water over Columbia River dams, and send the power south, at a reasonable price.

“I am sure that the generators receive a fair return,” Richardson said. “I will not allow them to unjustly profit from the current market conditions. I will demand a fair price.”

Locke also urged Kaiser Aluminum Corporation to pay its workers 100 percent of their regular wages during a 10-month shutdown.

Kaiser decided earlier this week to idle its Spokane-area plant because it can make more money by selling its federally-subsidized, cheap electricity. The company has said it will pay full benefits and up to 70 percent of wages to workers during the shutdown.

Locke spoke with Kaiser President Ray Milchovich Thursday, urging him to reconsider. The governor also wants Kaiser to return some of its power to the BPA.

Milchovich agreed to discuss the issue further, Locke said.

Bon star to shine again

In the meantime, a popular holiday decoration turned off during the energy crunch is coming back on. The Bon Marche in downtown Seattle will relight its popular holiday star on Friday at 5 p.m.

The star was turned off Monday, after Gov. Locke urged businesses and residents to conserve power. Locke lifted the restrictions on Tuesday.

-- (in@energy.news), December 14, 2000.


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